Rustycoupler,
First I model in HO and I have no feel for what will fit into an N "B" unit, you can use a different speaker but it must be 8 ohm. The capacitor is built in on the "Sounder". Tony's has some small speakers that will work. It is in their "Dream Speakers" listing, a 1/2 inch is the smallest. This will need a baffel for good quality sound.
One issue I have with the "Sounder" is the volume is loud. I started a posting last week called "How to quiet down the MRC Sounder" and a lot of good advice came on it. This post should be required reading for using the "Sounder". Even when you set the volume down to the lowest settings it is like being "trackside". (exageration but you get my point).
Of the four sounds available on Model 1666 the "F" unit and the RS-3 are the best. SD 60 and SD 70 are high pitched, this may have been a volume issue for me. I will use the "Sounder" "F" in some of my P2K geeps and Stewart "F" units.
Hope this helps, Chris
I have replaced the speaker on a sounder 1662 with a 5/8" x 1.25" oval speaker with no significant change in sound. It maybe a little bit quieter but not much. I would think you can use any 8 ohm speaker and get ok results except that the bass will diminish with a small speaker. See how large a speaker will fit in your loco size to fit.